2009
Small
Business
Credit
Card
Survey
About NSBA
Since 1937, NSBA has advocated on behalf of America’s small-business owners. A staunchly nonpartisan
organizati...
Message from the Chair
Since 1937, NSBA has been the nation’s leading small-business advocate. As part of
NSBA’s mission t...
What types of financing has your company used within the last
12 months to meet your capital needs?
      Credit cards    ...
What percentage of your overall debt/
                                                                               Profi...
What’s the credit limit for all your credit
    cards combined?
                100K
and
More
                            ...
When asked what changes credit-
card companies made repsondents
reported the following:
                                  ...
Thinking about your credit cards...Do You:
               Pay
off
credit
card
bill
each
month
                          40%...
Are the rules surrounding what
constitutes a late payment different for
each of your credit cards?


             26%



 ...
If capital availability is a problem for your business, what is
    the effect on your operations?

       Unable
to
grow
...
Does your small business accept payment via
credit card?




                43%



                                      ...
1156 15th Street, N.W.
     Suite 1100
Washington, DC 20005
   www.nsba.biz
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2009 Small Business Credit Card Survey

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Transcript of "2009 Small Business Credit Card Survey"

  1. 1. 2009 Small Business Credit Card Survey
  2. 2. About NSBA Since 1937, NSBA has advocated on behalf of America’s small-business owners. A staunchly nonpartisan organization, NSBA reaches more than 150,000 small businesses nationwide and is proud to be the nation’s first small-business advocacy organization. Throughout the year, NSBA conducts a series of surveys and quick polls to provide a snapshot, as well as trending data, of America’s small-business community. The NSBA 2009 Small Business Credit Card Survey illustrates the need for small businesses to access affordable and fair capital through credit cards. For more information, please visit www.nsba.biz. 1 NSBA 2009 Small Business Credit Card Survey
  3. 3. Message from the Chair Since 1937, NSBA has been the nation’s leading small-business advocate. As part of NSBA’s mission to address the concerns of America’s small-business community, I submit the NSBA 2009 Small Business Credit Card Survey. As small businesses across the nation struggle to keep their doors open through the ongoing economic crisis, one critical issue has been raised time and again: the need for small businesses to access affordable capital. As we’ve seen repeatedly through NSBA’s surveys, credit cards account for the largest—and growing—single source of financing being used by small businesses today. The NSBA 2009 Small Business Credit Card Survey provides a detailed view of how small businesses are utilizing their credit cards, how their credit-card companies are treating them, and the impacts of deteriorating credit-card terms on their business. Additionally, the survey provides valuable trending data from NSBA’s 2008 Economic Reports. Small business credit-card usage is on the rise. When asked in December 2008, 49 percent reported using credit cards in the past 12 months to finance their firms. In late- April, however, that number jumped to 59 percent. This increase is occurring despite a rise in the number of small businesses reporting worsening credit-card terms. Asked to evaluate their credit-card terms over the last five years, 79 percent reported worsening terms—up from 69 percent in December 2008. Even more eye-opening: when asked if their credit-card terms had worsened in the last six months, a whopping 75 percent reported that they had. Credit-card issuers also have been reducing credit lines. Thirty-three percent of small- business respondents stated that their credit limit had been reduced, up from 28 percent in December. Furthermore, fewer small businesses are paying off their credit cards each month, making them subject to some of the most egregious practices of the credit-card industry. In December, 50 percent reported paying off their credit cards each month, today that number is down to 40 percent. In past recessions, economic recovery has been led by the creation of millions of new, small businesses. However, unlike previous periods of economic uncertainty, today’s entrepreneurs are severely limited in their ability to finance new business ventures by leveraging the value of their home, borrowing from friends and family, or securing a traditional loan. This leaves one clear, often unattractive, option: credit cards. The NSBA 2009 Small Business Credit Card Survey comes on the heels of passage of critical credit-card reform legislation in the U.S. House of Representatives and in advance of expected debate on a similar measure in the U.S. Senate. NSBA has been an active and outspoken proponent of credit-card reform, citing the ever-increasing reliance small businesses have on credit-card financing, and calling on lawmakers to include small-business owners in any broad reform of the credit-card industry. For more details on NSBA’s stance on credit-card reform, please click here. I hope you find this survey useful and welcome your feedback. Keith Ashmus NSBA Chair NSBA 2009 Small Business Credit Card Survey 2
  4. 4. What types of financing has your company used within the last 12 months to meet your capital needs? Credit cards 59% Earnings of the business 51% Bank loan 45% Vendor credit 30% Private loan (friends or family) 19% Used no financing 19% Leasing 7% Small Business Administration (SBA) loan 5% Factoring (pledging accounts receivable) 1% Private placement of debt 1% Private placement of stock 1% Public issuance of stock 0.5% If you checked credit cards, how many cards do you currently use? 23%
 23%
 1
 2
 3
 10%
 4
 More
than
4
 31%
 13%
 3 NSBA 2009 Small Business Credit Card Survey
  5. 5. What percentage of your overall debt/ Profile of financing is comprised of credit-card debt? Respondents 25%
or
more
 34%
 Number of Personnel 11%
to
24%
 10%
 0 4.3% 1-5 43.6% 5%
to
10%
 23%
 6 - 19 24.8% 1%
to
4%
 15%
 20 - 99 22.0% none
 18%
 100 - 499 4.6% 500 or more 0.7% 0%
 10%
 20%
 30%
 40%
 Year in Operation Less than 1 year 1% 1 - 3 years 3% What is the approximate interest rate you 4 - 6 years 7% are charged on your primary credit card? 7 - 10 years 18% 11 - 15 years 15% 16 years or more 56% 20%
or
more
 20%
 15%
to
19%
 28%
 Industry Construction 20% 10%
to
14%
 31%
 Professional 16% 5%
to
9%
 13%
 (i.e.Doctor, Attorney, Less
than
5%
 8%
 Accountant) Manufacturing 12% 0%
 10%
 20%
 30%
 40%
 Retail 9% Distribution 8% Insurance 7% Health Care 5% Software 5% Eighty-six percent reported using Printing and Publishing Finance 3% 3% their consumer or business credit Real estate 3% Fabricated Products 3% cards primarily or exclusively for Food Service 2% business purposes. Transportation Biotech 2% 1% Chemicals 1% NSBA 2009 Small Business Credit Card Survey 4
  6. 6. What’s the credit limit for all your credit cards combined? 100K
and
More
 23%
 50K
to
99K
 30%
 20K
to
49K
 31%
 10K
to
19K
 11%
 Less
than
10K
 5%
 0%
 10%
 20%
 30%
 40%
 What’s the largest credit limit you have for a single credit card? More
than
50K
 16%
 30K
to
49K
 20%
 20K
to
29K
 26%
 10K
to
19
K
 25%
 Less
than
10K
 13%
 0%
 10%
 20%
 30%
 In the last five years, have the terms of your credit card: 3%
 18%
 Gotten Worse Improved Improved
 Not Sure *o+e,
-or.e
 Not
Sure
 79%
 5 NSBA 2009 Small Business Credit Card Survey
  7. 7. When asked what changes credit- card companies made repsondents reported the following: Overall in the Last Year Overall (April 2008 to April 2009) 70%
 63%
 60%
 50%
 41%
 40%
 30%
 23%
 20%
 10%
 0%
 Credit
limit
reduced
 Interest
rate
increased

 Switched
from
fixed
to
variable
 In the last six interest
rate
 months alone, 33 percent of small businesses 30%
 reported having 25%
 25%
 their credit limit 22%
 reduced. 20%
 19%
 15%
 14%
 12%
 10%
 8%
 5%
 0%
 Nov. 08 to Jan. 09 Feb. 09 to April 09 Nov.
to
Jan.
 Feb.
to
April
 Credit
limit
reduced
 Interest
rate
increased

 Switched
from
fixed
to
variable
interest
rate
 NSBA 2009 Small Business Credit Card Survey 6
  8. 8. Thinking about your credit cards...Do You: Pay
off
credit
card
bill
each
month
 40%
 Carry
a
balance
of
less
than
 23%
 $10,000
 Carry
a
balance
of
$10,000‐ 21%
 $25,000
 Carry
a
balance
of
more
than
 16%
 $25,000
 0%
 20%
 40%
 60%
 33% of respondents reported receiving their credit card statement after its due date. Have you ever encountered Have you ever received your bill a credit card due date that too close to the due date to mail seems to randomly change? it and have it received on time? 15%
 8%
 35%
 Yes
 Yes
 48%
 No
 No
 37%
 Not
sure
 Not
sure
 57%
 7 NSBA 2009 Small Business Credit Card Survey
  9. 9. Are the rules surrounding what constitutes a late payment different for each of your credit cards? 26%
 Yes
 No
 14%
 Not
sure
 60%
 Nearly a quarter of How do you leverage your business loans? small businesses surveyed juggle 46%
 more than four credit cards Personal
or
business
credit
cards
 Business
savings
 41%
 for business purposes. 39%
 Personal
savings
 29%
 2nd
mortgage
 0%
 10%
 20%
 30%
 40%
 50%
 NSBA 2009 Small Business Credit Card Survey 8
  10. 10. If capital availability is a problem for your business, what is the effect on your operations? Unable
to
grow
business
or
expand
 62%
 operaFons
 Reduced
the
number
of
employees
 56%
 Reduced
benefits
to
employees
 43%
 Unable
to
finance
increased
sales
 34%
 Not
a
problem
/
No
effects
 24%
 Unable
to
increase
inventory
to
meet
 23%
 demand
 Closed
stores
or
branches
 7%
 0%
 20%
 40%
 60%
 80%
 If you were able to obtain additional capital for your business, what are the first three actions that you would take? Hire
addiFonal
employees
 46%
 Invest
in
new
plant
or
equipment
 40%
 Invest
in
adverFsing
 37%
 Increase
benefits
to
employees
 23%
 Would
not
make
any
changes
 19%
 Invest
in
research
and
development
 19%
 Increase
inventory
 18%
 Invest
in
e‐commerce
 14%
 Open
new
stores
or
branches
 7%
 0%
 10%
 20%
 30%
 40%
 50%
 9 NSBA 2009 Small Business Credit Card Survey
  11. 11. Does your small business accept payment via credit card? 43%
 57%
 Nearly half of Yes
 No
 small businesses surveyed said they SURVEY METHODOLOGY have encountered a credit-card due The NSBA 2009 Small Business Credit Card Survey was conducted among 288 small-business members of NSBA April date that seems 27 to May 5. This targeted survey is part of our ongoing series to randomly of member surveys which includes the 2008 NSBA Mid-Year Economic Report, the 2008 NSBA Year-End Economic Report, change the 2009 Health Care Survey of Small Business and the 2009 Energy Survey of Small Business. The respondents to these surveys, while representative of the overall small-business community in terms of industry, tend to be slightly larger and older businesses. NSBA 2009 Small Business Credit Card Survey 10
  12. 12. 1156 15th Street, N.W. Suite 1100 Washington, DC 20005 www.nsba.biz

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